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but the thought the commission should see a product presentation friend of mine us >> how many preparations are there? how many forms are required >> it would be nice to know how many forms would be on the site and i think that would go along way in the presto express how big a job this is and how much this brings together in one place. how many categories of business. people like to think oh, small business owner but it's maybe 55 categories and this may be a
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complicated one and fin facts but they write articles about this >> great job. >> next item please. commissioners item 8 discussion on proposition e this is a discussion item >> so commissioners we've been fielding questions through our office and other business organs of wanting a review about prop e i thought today would be a good time to go over some basics. if there's any concerns, what's ahead because i'm sure you'll be fielding some questions as well. and while there is a good deal of work happening in the background like the transition of the different payroll tax
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incentiv incentives. the tax and treasures office is beginning their implementation but the basic concepts are we we need to help business prepare for a transition. so in your binder is a - is information that we've put together so that if i go to a business association that i hand this out to walk them through. some of this i'm going to highlight on some of this.
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let's go to the first slide. next thank you. so as your well aware that now we have a 1.5 percent payroll for businesses in the city that have payroll over $250,000 i should say 2 hundred and 50 thousand one dollars. of a business is under 2 hundred and 50 thousand they don't pay the payroll taxed. so the grois receipts will phase over a 5 year period starting the tax year of 2013 so next year. and this phase is is to low both
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businesses and the city to have a smooth transition so that if for any reason the gross receipts is not bringing in as much money we are operating as a deficit but it the gross receipts is coming in a herself we might phase in in a shorter amount of time. thank you. and the schedules are broken out into four tiers there's a zero to one million and it's exempt and 2 had the to million and above. so businesses will be taxed at
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the progressive tier so if you're a business that has $3 million in revenue your first million is not taxes your million to 2.5 million is talked at the 2 to 2.5 million taxable followup u amount eaten the last $500,000 will be taxed. so here's an example i mean chris has provided a good example so one million will be taxed? one million taxed the 1
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tier rate did i misquote that i miss stoke so once you reach over one million that first million is taxable. so correction. and then as i noted there's a small business under one million gross receipts is exemption in the gross receipts. the one is particularly for the business fee will increase in 2014 for all businesses and i think what i'd like for you to do is flip to page 2. where i see the charts. and so for 2014 to 2015 the base
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payroll there will be a new business fee and then two 15 the set business register fee will be under two schedules so businesses in schedule one >> yes. >> i have is question. is there any you type of outreach that's going to be done >> there will be and at this time, the controllers office is working on are developing plans for this and our outreach will happen after we go after june or july of 2013 because they're
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still developing things like the tax credits and how that will be applied. who you get into some of the larger entities there's bigger structures and that needs to be careful communicated so that when the time for outreach there's one package of information going out. so the tax and treasurers office have additional staffing for that >> commissioner reeling. >> so of a small business the gross receipt is less than 1
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million it's exemption. >> right the first million is not exemption so if you will look at page 2. the whole 2 million is taxable >> yeah, but it's at a different taxable rate. so if you look at that page once you reach over a million that million is a taxable minimum >> so for schedule one 1.75 percent of - the first million is at - the 5 hundred thousand is taxable at the 1 point percent tax rate. >> commissioner. >> what about the businesses that are a combination of the
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manufacturing and other businesses structure. >> right so going back to i think i think this is where we need to work this out. we're not going out and educating businesses right now. the likelihood you'll by looking at the bigger side of our business >> director i believe if more than your business is one second for it will be taxed at a different rate and i make everything i sell.
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so i'm making it and selling it. right but you're also whole sailing >> yeah, but wholesale and retail are in the same bracket. by definition the - so i look like a retailer but i'm a manufacturer if you proportion the dollars >> well, is your margin bigger than air manufacturing costs it will be interesting to find out how they find this.
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>> look by definition your whole sailing it and selling it. >> not every manufacture will have a manufacturer presence. >> yeah, so this is - anyway pointing out. >> again we're not going out and promoting this yet base we're still talking about this and there will be an awe apportionment but they'll be some guidelines on. >> i have a question.
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saying there is a small business exemption for gross receipts less than one million but on the second page it shows the gross rates is from zero to one million i'm confused >> once i makeover a million then your taxed on that million but as long as your taxed - the first million is you're paying taxes on but if you're not making one million you're not taxed. >> as you keep going up the tier the one million is taxed on
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the section tier the taxable amount the tiers remain the same. prevents stepping so when i cross a boundary and the rate goes up or down there's no incontinuity. >> this goes in effect in 2014. there is one business who wants to hire but basically they'd have to wait until 2014 and there is a schedule the phase in
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schedule will still have 2014 is 10 percent is gross receipts the remaining will be payroll tax. the - if they're under $500 in pay role they may be able to apply the pay role exemption tax. >> there probably are some cases where your taxes will be greater than but if you're hiring people you're going to get it in the payroll see or the - you're going to pay the taxes in the year 2014 but if you want
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to make a determination if you wait i'll be able to avoid this. you'd want to know they might decide oh, the new tax is so moo much better for me, i think i'll wait. this is interesting conversation >> right so neo fourteen and neo fourteen it keeps on going up. 2017, 75 percent gross receipts
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payroll tax and so forth >> so that is the phase in period. but remember we already phased in the mayors suggestion >> so in this information i know you say that they're working on it with the tax collectors office, can we put this on the website to educate? at least the schedule. as i look at this thing there is a gross receipt rates and the phase in and as a business owner i'd like to know this >> so for the members of the pick up the document is
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available under small business assistance. tab there's a link to gross tax information and. there's a direct link to this document if you'd like to punch >> i see chaos between gross receipts now what does it mean it 10 percent gross receipt tax? what's the equation there? >> well, what we will do as the tax and treasuresers office
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there has been some discussion about online tools and to help businesses figure this out. so as we get closer we'll check in with this and see if they're ready to do a presentation >> this will pail in comparison to have someone figure out this prorated schedule. i know what i have to pay a examiner cpa to do this >> at least maybe an amnesty
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program come later and is well, you should have known. >> maybe we can come up with a straight online calculator but this period 2014 and up sees complicated to me. >> which is why it is good for us as a commission that we're having this discussion so that you have the abilility to think and we're going to work with other departments on this. great. my comments are meant to be critical but educational. we're going to be pulling out hair out for a few years
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>> once we go to all gross receipts that will be another story but the phase in will be tough. >> how can we minimize this to help understand this complicated process. >> well, certainly me and whoever else - well, what other businesses do we have? the restaurant business. and take us through that process so we can anticipate some of the questions >> and i'll have a cigarette way into this we can have a more robust discussion and i'll be
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meeting with the president adams to outline the retreat and we he can think about having a more robust discussion on this at the retreat. >> one thing is what potential hybrids are on here. f certain restaurants sell and package their own sauces that could be another hybrids. and this other discussion how do we do the other sections. and this lady has a restaurant
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so she'll have some thoughts about that >> and other restaurants have entertainment. >> so, now we have a module of hybrids to be considered. >> great thank you so much for that. >> thank you. >> so that was our beginning overview and working on this and we have a year ahead have to start helping businesses transition into this. >> that's the key it's a year. is clock is starting to tick now. this is going to be a yearlong educational project.
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we have the tables set up at flavors if we can get a table but it can start answering some of the questions. >> and perhaps we'll be meeting sometime next week but we could look at this as a potential workshop. >> thank you. >> mr. president, can we call public comment on the gross receipts tax? seeing none public comment is closed. >> update and the small business center and making
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comments on small business activities. >> so commissioners this morning mayor lee gave his city address and this is the first address as he being mayor. while there were numerous items when he went through all the things awe employment over the last year but business-related he talked about the gross receipts and passage and the collective work on creating that piece of legislation and the unanimous sport around that. no need the growth of manufacturing the increasing of funding for lending programs that the city is doing and soon
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by the end of this month through mid february i think we may be getting the announcement about the mid loan funding. so you'll be receiving a announcement on that. and then is commercial corridors with the investment program and as jane mentioned he talked about is license 1, 2, 3 and the ongoing comment to developing is online business tool. there were numerous highlights but those are the small business related. next there is - how do i want to say this. the cast program has been this
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10 year analysis around soft story building what needs to be done to shore them up to make them more secure during an earthquake and a 10 year program to identify what sites and what kinds of construction need to be done. and so the mayor is getting ready to implement this program and is work to start doing - working on getting those soft story structures more sound. as he relates to our - the structures that have mixed use homes above and business below
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when you do the improvement it does help us bring us together on this program - there is a california office of historical preservation we can look at assess built and those structures as they're going through size save and preserving the historic nature of these.
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so over the next 8 months our office and some private cast inspectors are going to start working together >> well, there's a meeting on friday that's going to cover this. >> right and in this - in the scope - i mean working with the structures that center the mixed use those structures will be the last structures to be working with and so last week we did have a meeting to talk about what we can do on the financing side. the landlords will deal with the earth quake side but written in